Does anybody understand debt? Some - but not many. Today's post is less of my normal extended prose and more of an outline. I've been invited to speak at some writing classes here at the college and this is intended to serve as my speaking notes. Background: What have you heard? Krugman in New York … Continue reading Does Anybody Understand Debt?
Earlier this week the absurd and totally unnecessary debate in Washington over raising the national debt-ceiling came to an agreement, both houses of Congress passed it, and the President signed it. Earlier this week I gave this metaphor for the deal, wondering why we need enemies with "friends" like our representatives in Washington. Now that … Continue reading We Have A Debt-Ceiling Deal. The Economy Loses.
A great graphic from The New York Times:
Anybody who tells you they know exactly what's going to happen if Congress doesn't raise the government debt ceiling before next week is just making it up. Reality is we don't know for sure. As Brad Delong notes (and Krugman and Nick Rowe), economists don't even have nicely worked-out theoretical models of what happens if … Continue reading What Happens If Government Debt Ceiling Isn’t Raised? 2 Things That Might, 1 That Will, and 1 That Won’t
Another in the series. See part 1 here. If the politician or reporter says something about "our grand children having to payoff the national debt", it's totally bogus. The speaker is either ignorant, foolish or has a hidden agenda they want you to accept. Sometimes they use phases like "saddle our grandchildren with debt" … Continue reading How to Tell If the Politician or Reporter Is Ignorant, Foolish, or Has a Hidden Agenda – Part 2
The Great Recession of 2007-2009, which has been morphing into a Depression, has been different from most recessions of the post-World War II era. It has been what economists call a "balance-sheet" recession. Normally (at least since World War II), recessions were the result of the central bank (The Fed in the U.S.) raising interest … Continue reading Private Debt vs. Government Debt
One of the reasons my posts have been scarce* lately is because, frankly, I'm frustrated and nearly speechless at the foolish talk and nonsense that currently passes for news about the economy lately. In particular, this year the politicians and reporters in Washington have been focused on the federal government deficits and debt. We are … Continue reading How to Tell If the Politician or Reporter Is Ignorant, Foolish, or Has a Hidden Agenda – Part 1
In past posts, I've emphasized that tax cuts don't really generate greater revenues for the government except under the most unusual circumstances. Tax cuts do exactly that, they cut the taxes available to the government. And that is one of the three big reasons why the U.S. government is running large deficits today and has … Continue reading The Public Debt Is Rising Because Of Tax Cuts and Wars
Just after I finished my Background Info on National Debt post, I ran across this from James Galbraith at New Deal 2.0. He does a nice job of pointing out some of the errors of the "oh-my-god-the-deficit-is-going-to-destroy-us-if-we-don't-cut-grandma's-social-security" crowd. For those not aware, Pete Peterson is a billionaire that has spent millions trying to frighten people … Continue reading More re: National Debt
National debt continue to dominate economic and political talk. This week Moody's bond rating agency downrated Japan's national government debt. The Serious People and Talking TV Heads will be full of dire prognostications for Japan. Of course, I don't see why we should believe Moody's or S&P anymore after they reassured us for years that … Continue reading No, Sovereign Currency Nations Don’t Go Bankrupt